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Arthurs’ report recommends abolishing WSIB experience rating

By Linda Johnson

07/10/2012|www.cos-mag.com

Harry Arthurs

The current experience rating system used by the Ontario Workplace Safety and Insurance Board (WSIB) to encourage safer workplaces should be abolished unless the board undertakes aggressive measures to stop claims suppression, a report on WSIB funding says.

The report, written by Harry Arthurs, former president of York University, was commissioned in 2010 to review the board’s financial circumstances and make recommendations on how the board could reduce or eliminate its unfunded liability, estimated at about $14.2 billion.

Experience rating (ER) — which is aimed at reducing injuries and promoting return to work by rewarding good safety records with lowered premiums and rebates — was, Arthurs says, the most contentious of all the topics covered in his report. While workers’ groups told him that ER programs encourage employers to prevent reporting (often depriving workers of benefits), employers said such practices are rare and the programs are making workplaces safer.

In his report released last May, Arthurs concludes non-reporting is widespread and calls for greater monitoring of companies by the board and increased financial penalties against companies found guilty of suppressing injury claims.

“In my view, the WSIB is confronting something of a moral crisis. It maintains an experience rating system under which some employers have almost certainly been suppressing claims,” he writes.

“Unless the WSIB is prepared to aggressively use its existing powers — and hopefully new ones as well — to prevent and punish claims suppression, and unless it is able to vouch for the integrity and efficacy of its experience rating programs, it should not continue to operate them.”

Among other recommendations, Arthurs says the WSIB should track worker complaints, conduct more random audits, train WSIB staff in ways to detect abuses and better educate employers on their duty to report claims and the penalties for not doing so.

Every employer, he also says, should be required to designate a health, safety and insurance officer, a person who ensures the company complies with the Workplace Safety and Insurance Act. As well, the board should be allowed to impose much stricter penalties, raising maximum fines, for example, from $25,000 to $100,000 for individual offenders and from $100,000 to $500,000 for corporate offenders.

But Kevin MacNeill, a partner at Toronto-based law firm Heenan Blaikie, says the report’s emphasis on punitive measures is unjustified and unproductive. He describes some recommendations as draconian and says they are based on conclusions not supported by Arthurs’ own evidence.

Arthurs himself, MacNeill points out, says the evidence presented by both sides is “anecdotal, uncorroborated and not statistical.” Yet, he goes on to conclude that non-reporting is a major problem and to outline significant measures needed to prevent violations.

“If you say the evidence is not the clearest, and if you say this deserves further study, then that’s where the analysis should end for now,” MacNeill says.

“Instead he says, ‘let’s really go to town on the employer class.’”

In fact, MacNeill adds, though Arthurs says fraudulent worker claims may be contributing to the WSIB’s unfunded liability, his report focuses solely on employer abuses. An educative model — including information campaigns and inspection audits — would probably be more effective in securing compliance.

Among the recommendations that MacNeill describes as unduly harsh are Arthurs’ suggestions that a company lose its eligibility for favourable premium adjustment or rate rebates for up to five years and that the WSIB impose administrative penalties of up to three times the employer’s annual premium rates.

“Some of the penalties proposed, if implemented, could go into the millions of dollars, which is unheard of in every other area of Ontario employment law,” he says.

Christine Arnott, spokesperson with the WSIB, says the board is committed to review the ER program and will draw on the report’s recommendations to improve the system.

Since March 2008, she adds, the board has introduced several improvements, such as ensuring companies responsible for a workplace fatality are not eligible for a rebate, as well as the expansion of the NEER assessment window from three to four years to better reflect the real cost of claims.

“Underreporting — if it is happening — is clearly something that needs to be considered and addressed,” she says.

Arnott says the ER programs are important to the board’s current system and, in most cases, promote injury prevention and workers’ return to work.

“We know that ER programs — if they continue to exist — need to be better focused on prevention and return to work outcomes,” she says. “We will seek further stakeholder input if a new system is developed.”